Supply Chain Issues Of The 21st Century

A May 2014 headline article in the NewYorkTimes reported that human-induced climate change is not only real, but it has already
occurred here in the U.S.

The article was based on a recent report from the National Climate Assessment titled "Climate Change Impacts in the United States,” which claims it is
no accident that some areas of the country are drier — in fact, much drier — than usual; other areas are experiencing “torrential” rains;
winters across the country are generally warmer and shorter; and heat waves are beginning to last longer and are expected to become much more severe.

“Climate change, once considered an issue for a distant future, has moved firmly into the present,” according to the scientists that conducted the research
and prepared the report.

Those of us living in parts of the country that recently experienced one of the longest and coldest winters in memory may question this report, and indeed
climate change is a more controversial issue in the U.S. than in other industrialized countries.

Whatever our views on climate change, it is important for JanSan industry businesses — manufacturers, distributors and supply chain distribution,
and cleaning contractors — to become much more agile and flexible to handle environmental changes and sustainability issues that could impact
their businesses in the coming years.

The key issues of concern, which we will discuss in greater detail below, are energy and energy sources; fresh water for drinking, industry, and agriculture;
cost increases as a result of the potential depletion of some natural resources, including added costs to find new sources to replace these natural
resources; and dealing with the negative impacts of extreme weather.

Energy

The last real oil crisis to seriously affect the United States was back in 1979 as a result of the Iranian Revolution.

Since then, we have had enough petroleum and energy from various sources to meet our needs and grow our economy.

However, the cost for energy has climbed, and even though new technologies such as hydraulic fracturing may help this country avoid another oil crisis
and become more energy independent, these costs are predicted to continue to rise as well.

This means that instead of a lack of fuel, it will be the cost of fuel and energy that JanSan businesses will need to grapple with and address.

How much of these increased costs can be passed on to the end customer?

How much will industry businesses need to absorb to remain competitive and hold onto their customers?

These are just some of the issues that may need to be addressed as a result of rising energy costs.

Water

Many scientists around the world believe that water, possibly more so than energy, will become the biggest global concern for people, business and industry.

In fact, it is believed that water shortages could make water as costly as oil in this century, and that instead of an oil crisis caused by oil shortages,
we can expect a water crisis caused by water shortages that could be very significant.

In California, where much of the produce consumed in this country is grown, the state is experiencing its worst drought in a century.

In March 2014 there were high hopes for a significant rainfall event to help ease the California drought.

While the rainfall was welcome and substantial, it still left 91 percent of the state in a severe drought.

Rising Costs

In 1999 the book Natural Capitalism was published, which underscores the critical importance of sustainability of our natural resources (i.e.,
“natural capital”) in order for our society to survive and thrive.

The book drew considerable attention, and has since been revised, published in several languages and included as part of some college curriculums.

As it pertains to our discussion here, the authors write, “Humankind has inherited a 3.8 billion-year store of natural resources … such as water,
minerals, oil, trees, soil, etc. … [but] at the present rate of use and degradation, there will be little left by the end of the next century”
(i.e., the end of the 21st century).

What this means is a matter of basic economics.

As natural supplies dwindle or become harder to come by, costs will rise.

In addition, it is expected that more regulations here and abroad will be instituted to deal with rapidly dwindling resources, which will further add to
these rising costs.

Extreme Weather

While climate change is a controversial subject in the U.S., what is not in question is that in 2013 the U.S. experienced seven “extreme weather” events
that caused more than $1 billion in damages each.

Since 1980 the total cost in damages of extreme weather events in the U.S. exceeds $1 trillion.1

Hurricane Sandy, which hit the New York area in October 2012, is now considered the second-most costly hurricane in U.S. history, impacting millions of
people.

Hundreds of JanSan-related businesses in the Northeast corridor were called upon to help with the cleanup and many suffered considerable damage as a result
of the storm.

Each of the issues discussed here can and possibly already are having an impact on the JanSan industry and the many industry segments it serves, such as
healthcare, education, hospitality and industrial/manufacturing.

The ways we plan for and address these concerns today will allow us to better help our customers in the years to come.

Fortunately, new technologies such as web-based systems and analytics are available that can help distributors advise their clients of greener and more
sustainable products that also help use natural resources more efficiently.

This will help our industry and our end customers adapt to impending challenges, and become greener and more sustainable … and our end customers
will be counting on our expertise to help them in this more environmentally respectful direction.

Vice President of Marketing for AFFLINK

Michael Wilson is vice president of marketing for AFFLINK, a global leader in supply chain optimization, providing clients with innovative processes, such as the ELEVATE™ process, as well as procurement solutions to drive efficiencies in today’s leading businesses. He can be reached through his company website at www.afflink.com.